Japan Currency Chief Mimura Tells Markets to Heed ‘Very Clear’ Yen Warning as Currency Rebounds

Japan’s top currency diplomat Atsushi Mimura said on Monday that markets should take at face value the “very clear” message Tokyo and Washington delivered last week on the yen, signaling his resolve to act against excessive falls in the currency.

“Japan’s prime minister, finance minister and the US have sent a very clear message. Markets should take that message at face value,” Mimura said in an interview with Reuters. “I will be watching closely whether markets will continue to take (the message) at face value”.

The yen surged as much as 0.4% to 156.51 per dollar following his remarks, hitting its strongest level since September 18 and erasing earlier losses. The currency had been trading around 157.5 before his comments.

US President Donald Trump raised concerns about yen weakness at a summit with Japanese Prime Minister Sanae Takaichi, Finance Minister Satsuki Katayama said on Friday, offering an unusually detailed account of the leaders’ talks on currencies.

In a further sign of shared determination, Katayama and her US counterpart Scott Bessent reaffirmed in phone talks on Friday that the yen’s undervaluation is a matter of concern.

While Mimura declined to comment on whether Japan could intervene again to prop up the yen, he said he remained neither satisfied nor reassured over the yen’s recent moves, suggesting Tokyo remained on guard against renewed declines.

“I have nothing to comment on how we could act,” Mimura said when asked whether Japan stood ready to conduct solo or coordinated yen-buying intervention again.

He brushed aside concerns about funding constraints, saying: “I have absolutely no such concern”.

A weak yen has become a source of concern for Japanese policymakers by pushing up import costs, including for fuel.

The Bank of Japan raised interest rates to a 31-year high of 1.25% earlier this month, but the move has failed to prop up the yen as the US Federal Reserve’s rate hike and hawkish communication kept the US-Japan rate gap wide.

Mimura said the rate gap has been narrowing as a trend, noting the BOJ is clearly on a rate-hike path while the Fed only began raising rates in September.

“We are always mindful of such developments in watching market moves,” he said.

Japan and the US conducted a rare coordinated intervention on July 31 to prevent the currency’s slide to near 40-year lows from destabilizing financial markets, a move Mimura described at the time as the culmination of the two countries’ “currency alliance”.

Japan has spent roughly 27 trillion yen on interventions this year, including about 11.7 trillion yen between late April and May and another 15.4 trillion yen from July through August.

Mimura also pushed back against the view that Japan’s fiscal policy was seen as reflationary, prompting investors to sell yen.

“I’ve never received any criticism from G7, G20 or other overseas counterparts that Japan’s fiscal policy is too expansionary,” he said.

Nomura currency strategist Yusuke Miyairi said Mimura’s remarks should create sufficient tension in the market about possible actual intervention by the Finance Ministry.

“Previously Mimura had hinted at staying silent to maintain market anxiety about the possibility of intervention, but since last Friday, he has joined the verbal intervention efforts”.

The yen was trading around 156.75 against the dollar after Mimura’s remarks.